hello,we have been sending our 10th grader to a christian private school for a few years and have just heard some information on the 529 plan that might make me think i can use it for our current private school payments. Our current school prices are about 9,000 a year. could i dump money in and take it right out for a private school? or does it need to stay in for a period of time? but could it be used for the private school payments?stephen cromerstephenc@axs2k.netwest columbia, sc 29170

You can only make qualified withdrawals from a 529 for post-secondary education expenses. Paying for high school would be a NQW, and any earnings would be subject to tax and penalty.

You might be thinking of using the 529 to take advantage of the unlimited SC state tax deduction. Wth an immediate withdrawal, there should be no earnings to be taxed or penalized and you can effectively pay the private school education with pretax (statewise) dollars. You need to check if SC recaptures any previously claimed deductions for NQWs - many states do. That information could be in the state's disclosure documents or should be known by a tax professional in your state. Even if SC does not recapture deductions for NQWs, this really isn't how 529 plans are intended to be used.

I am not the person that posted the original reply, but I believe NQW stands for Non-Qualified Withdrawal - meaning you would have to pay taxes on the earnigns in the account.

If it would be appropriate for you, you could check with your accountant or broker about a Coverdell Educations Saving Accounts (limit $2,000 contrib per year), which can be used for secondary education. Much smaller Contrib. limit though...

In short there are ZERO federal tax benefits to putting money into a 529 and taking it right out again even if you could for HS which you cannot. And over a short terms I don't see any benefit to flipping $2K thru a CESA

Whether or not you can get a quick state tax benefit is problematic--read the SC rules--in most states thay have closed that door--which wasn't there anyway except for college use. Yes in a couple of states you could get a state tax incentive to put money into a state plan even if you paid the tuition with it a few weeks later--I think most wised up to that game.